BY ANISAH SHUKRY
Published: 26 November 2014
The
majority of Malaysians will likely struggle in the event of income
emergencies as they have no financial assets and no banking or financial
account of any kind, the Malaysia Human Development Report 2013
revealed.
More than half
or 53% of Malaysian households have no financial assets, while one in
three Malaysians do not have an account, the report commissioned by the
United Nations Development Programme (UNDP) said.
Rural
households have the highest number of those without any financial assets
(63%), compared to 45% of urban households, and by ethnic group,
Bumiputera and Malays chalked up the highest figures as those without
such assets.
“Among
ethnic groups, about 57% of non-Malay Bumiputera and 55% of Malays have
no financial assets, with the figure for the Chinese and Indians at 45%
and 44% respectively,” read the report which was released in Kuala
Lumpur yesterday.“In
other words, roughly one out of two Malays, non-Malay Bumiputera,
Chinese and Indians have no immediate liquid financial assets, making
them vulnerable in the event of an income or employment shock.”One
in three Malaysians also had no banking or financial account, while
among the bottom 40%, the figure was much higher, at 50%, said the
report.“In
other words, one out of two low-income Malaysians do not have any
financial accounts. Access to formal credit (or lack thereof) may also
be the reason for the absence of financial assets,” it said.The
report stated that while Malaysia recorded a relatively high gross
national savings rate, the bulk of the savings came from the corporate
sector.Citing figures from the Household Income Survey (HIS), the report
also noted that nearly 90% and 86% of the rural and urban households,
respectively, had no savings, while the majority of households at 88%
had zero earnings from their savings.Meanwhile,
57% of Malaysian households reported zero earnings from investments,
with the figure for urban households at 50% and rural households at 66%,
according to figures derived from dividend income earned.The
report did not take into account forced savings, such as the Employees
Provident Fund (EPF), as households do not have access to such savings
in the event of immediate income or employment shock.But
a breakdown of data from EPF savings as at 2013 showed equally worrying
information: 90% of Malaysians nearing retirement age did not have
enough funds to sustain a basic lifestyle for more than five years.“Data
from EPF shows that as at end of 2013, about one-fifth of Malaysians
who are nearing retirement age (between the ages of 51 and 55) have less
than RM20,000 in savings, while nearly 70% of those at the age of 54
have savings less than RM50,000.“In
other words, assuming a monthly expenditure of RM900 per month, the
savings of the former could sustain their basic lifestyle for 1.8 years,
while for the latter, the figure stands at 4.6 years.”Though
alarming, neither the low amount of financial assets or EPF savings
were surprising, the report noted.It also explained that the low EPF
savings were due to the fact that the majority of Malaysians earned low
wages.“The
monthly wage distribution from EPF shows that in 2013, one-third, or
2.1 million, active members earn less than RM1,000, slightly more than
three-quarters (76.8%) earn less than RM3,000, and about 90% earn less
than RM5,000 a month.“As
expected, the inequality in compulsory savings is rather extreme, where
the top 1.7% of depositors in EPF has more savings than the savings of
the entire bottom 57% combined,” added the report.The
authors said that the lack of financial assets, especially for the
bottom 40%, severely limited their ability to borrow, invest, save and
improve their economic opportunities.The report was written by Tan Sri
Datuk Dr Kamal Salih, an adjunct professor of Economics and Development
Studies at Universiti Malaya (UM); Dr Lee Hwok Aun, from the UM
Department of Development Studies, and Dr Muhammad Khalid of the
Khazanah Research Institute.The
report was published for the United Nations Development Programme
(UNDP), and was sponsored by both the UNDP and the Economic Planning
Unit which is under the Prime Minister's Department. – November 26,
2014.-
See more at:
http://www.themalaysianinsider.com/malaysia/article/with-zero-savings-majority-of-malaysians-face-dire-straits-in-emergencies#sthash.OGK4WrDm.dpuf
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